Arizona’s Section 1115 Waiver Renewal Request (2016-2021)

With over 1.6 million Arizonans enrolled in AHCCCS, Medicaid has a far greater responsibility for impacting population health. Despite past innovation, we have an opportunity and obligation to do more. The goals of Modernizing Arizona Medicaid are to: (1) Engage Arizonans to take charge of their health; (2) Make Medicaid a temporary option; and (3) Promote a quality product at the most affordable price.

AHCCCS will seek waiver authority to implement new programs and processes to carry this momentum forward to meet future challenges and respond to current economic realities through the AHCCCS CARE plan. More information about the AHCCCS CARE plan can be found below

Arizona’s 1115 Waiver

Arizona's current Section 1115 Waiver is scheduled to expire on September 30, 2016. The Waiver allows Arizona to run its unique and successful managed care model and exempts Arizona from certain provisions of the Social Security Act. It also includes expenditure authority for costs not otherwise matched by the federal government. Waiver programs are required to be budget neutral for the federal government − not cost more federal dollars than without a waiver. Specifically, the Waiver allows Arizona to:

  • Mandate managed care;
  • Provide Long Term Care Services in home and community-based settings rather than more costly institutions; and
  • Implement administrative simplifications

AHCCCS has initiated several significant proposals addressing health care disparities in the American Indian/Alaska Native population.

Uncompensated Care Payment Reform

The two methodologies outlined in the waiver were requested for structuring a payment that will be made to IHS and 638 facilities that take into account their uncompensated costs in furnishing non-covered services by IHS and tribal 638 facilities, to AHCCCS enrolled individuals. The non-covered services include services that the State removed from the Medicaid state plan effective October 1, 2010. Some services have been restored since the end of the recession.

Participating facilities must select one of the two possible options in determining these payments to the facilities. The facilities that choose Option1-Encounter Based Approach, will notify AHCCCS of their selection and will have the option to switch their methodology election only once. If a facility elects to switch to Option 2-Historical Data Approach, the methodology by which their uncompensated care payment is calculated, the facility must notify the State.

Uncompensated Care Waiver Language

American Indian Medical Home

AHCCCS administers Medicaid to over 1.7 million members through a mandatory managed care delivery system. This system operates managed care insurance programs that establish each member with a Primary Care Physician (PCP) upon enrollment. Case management is provided as an administrative service to those members identified by their health plan to require care coordination or assistance in managing a chronic illness. Health plans also offer call lines staffed by medical professionals as an administrative service.

The AHCCCS model requires every Medicaid beneficiary to enroll with a managed care organization (MCO). The only exception to this requirement is for the American Indian/Alaska Native (AI/AN) population, which has the option of enrolling with an MCO or receiving services in the AHCCCS fee-for-service (FFS) program, known as the American Indian Health Program (AIHP). American Indians and Alaska Natives who enroll in the American Indian Health Program receive their care largely through Indian Health Services (IHS) facilities and Tribal facilities operated under Public Law (PL) 93-638. IHS and Tribal facilities do not have the administrative dollars to support case management functions or call lines to assist members in coordinating their care. The clinical leadership of IHS recognizes that fundamental changes in their system are required in this time of fewer resources and health reform.

Arizona is proposing to offer services that support an Indian Health Medical Home Program – Primary Care Case Management, 24-hour call line, diabetes education and care coordination – to its acute care FFS Population. IHMHPs will be charged with addressing health disparities between American Indians and other populations in Arizona, specifically by enhancing case management and care coordination. In tracking the successes of IHMHPs across the state, Arizona expects to see trends indicating cost savings through the prevention of hospital readmissions and improved control of nonemergent use of the emergency department. Non-IHS/Tribal facilities will also share in those savings as critical players in addressing healthcare disparities for the AI/AN population.

Public Comments:

AHCCCS has initiated significant payment and delivery system reform in recent years. With these reform initiatives established, the development of a State Health System Innovation Plan through a State Innovation Model (SIM) Design award, and the findings of the Arizona State Health Improvement Plan, Arizona is positioned to utilize DSRIP to further develop care delivery and payment reform network infrastructure, implement system redesign options identified through the SIM process, establish highly impactful outcome expectations, and strengthen population focused health improvements.

The Arizona DSRIP model will be built on provider network accountability. These networks will provide the foundational infrastructure and connectivity to foster provider collaboration and break down persistent silos that limit progress on outcome improvement and cost reduction. The specific transformation models and arrangements will be established based on the findings of the stakeholder driven State Health System Innovation Plan, developed through the Arizona SIM Model Design award.

More information regarding Arizona’s DSRIP proposal can be found in the pdf below.

AHCCCS DSRIP Documents 7-25-16

For more information visit the link below


Arizona’s successful Home and Community Based Services program for persons enrolled in the Arizona Long Term Care System (ALTCS) has had a long history as part of the State’s 1115 Waiver. To conform with the final rule that defines HCBS qualifying settings, Arizona conducted an assessment of its settings, as well as a draft transition plan. Extensive stakeholder meetings and public forums have already been held to seek input and engage in dialogue around the state’s Assessment and Transition Plan.

More information about HCBS can be found at the link below


The Arizona Health Care Cost Containment System (AHCCCS) is proposing to add a limited dental benefit of $1,000 per member per contract year for individuals enrolled in the Arizona Long Term Care System (ALTCS) to its proposed Section 1115 Demonstration proposal to the Center for Medicare and Medicaid Services. A contract year is October 1- September 30 of each year. The dental benefit is being proposed as the result of House Bill 2704 from the 2016 Arizona Legislative Session. The proposed dental benefit will require a waiver of federal comparability provisions. AHCCCS will be holding a public hearing (also called community forum) where the public can provide comments and questions about the proposal at the following time and location:

Authorization to provide the ALTCS Dental Benefit was provided as part of House Bill 2704 discussed during the 52nd Legislature, Second Regular Session, where the public was provided the opportunity to comment.

HB 2704 - Budget Reconciliation; Health; 2016-2017

DRAFT ALTCS Dental Waiver Changes

ALTCS Dental Fact Sheet

ALTCS Dental Waiver Public Comments

Final Proposal and Next Steps

On 9/30/2016, CMS approved Arizona’s request to modernize its Medicaid program and continue many of the existing authorities that allows AHCCCS to maintain its unique and successful managed care model, use home and community based services for members with long term care needs and other innovations that make AHCCCS one of the most cost effective Medicaid programs in the nation. More information including the approved package can be found below.

Arizona’s final proposal includes all comments received as well as responses. Over the next year, AHCCCS will work with CMS to negotiate the terms of the next Waiver.

Public Input

American Indian Initiatives

AHCCCS is accepting public comments during a 30 day comment period on the American Indian Medical Home proposal starting September 26, 2016 through Monday, October 26, 2016. The public will have the opportunity to review and comment on the proposal in writing via email to or mail to:

c/o Office of Intergovernmental Relations
801 E. Jefferson Street, MD 4200
Phoenix, AZ 85034

All comments received by Monday, October 26, 2016 will be reviewed and included in the final proposal sent to CMS.

AHCCCS is accepting additional public comments on the Arizona Long Term Care Services Dental Benefit proposal to allow for a 30 day comment period through Friday, July 22, 2016.

The public will have the opportunity to review and comment on the proposal in person at public forums throughout the State and in writing via e-mail to or mail to:

c/o Office of Intergovernmental Relations
801 E. Jefferson Street, MD 4200
Phoenix, AZ 85034

All comments received by Friday, September 25, 2015, will be reviewed, considered and included in the final proposal sent to CMS.

AHCCCS is accepting additional public comments on the DRAFT Budget Neutrality proposal to allow for a 30 day comment period through Monday, October 12, 2015.

Arizona’s DRAFT Section 1115 Demonstration request with more detailed information on the proposal can be found on the link below:

AHCCCS received 138 written public comments and a number of comments at the Community Forums around the State during the public comment period. All comments received are included as part of the State’s application for a new Waiver. AHCCCS highlights many of the common themes found throughout the public comments and provides responses, clarification and how the comments may have shaped the State’s proposal in the document below:

Public Comment Common Themes

AHCCCS is hosting community meetings across the state to provide the public with information about the upcoming Waiver submittal. These sessions will also provide the opportunity for AHCCCS to hear from stakeholders, including members and their families, advocates and providers. Space is limited so RSVP is required. Information about these meetings can be found at the links below: